A mortgage pre-approval is not a loan commitment. It typically means a lender has checked a buyer’s credit, takes their word for it that they currently are employed and make $ xxx annually. The lender in turn prints out a letter or certificate which states the buyer has been “pre -approved to buy a home for with a mortgage of $250,000”, etc.
Recently, I have had buyers or their agents refuse to provide me with this information. Over anxious sellers get confused and frustrated by this, and sometimes the buyer, getting into a seller’s ear, will convince the seller that the pre-approval is worthless anyway, since it is not a loan commitment. I have watched buyers tie up a sellers property, then get denied for their loan. This recenly happened with a buyer who made an offer on my listing, refusing to provide me with info. When I did a little homework, I discovered he had tied up another local property listed in the same neighborhood. I spoke with that listing agent, she told me, “He never gave me his pre-approval, and I asked him too.” Of course, this was very negligent of the agent.
What happens next? The buyer, knowing they have the seller in a bad position, asks the seller if they can rent the house, and do a lease-purchase, buying the home in 6 or 12 months.
This is a scam. Refuse any buyer’s offer who will not provide you or your agent with a pre-approval, especially from a local, credible lender.
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